WOW buys Knology for $1.5B

The purchase price is precisely what Knology was expecting: $1.5 billion; $750 million of that is a cash payment of $19.75 a share, and the other half is the assumption of $750 million in debt. The money is being put up by Avista Capital Partners, an investment bank founded in 2007 that has a controlling interest in WOW.

Knology is currently a publicly traded company. When the deal closes, the merged entity will be privately held.

Knology has more than 275,000 broadband subscribers, which means WOW is paying roughly $3,000 per sub. That compares to other recent big acquisitions, such as Cablevision’s purchase of Bresnan and Time Warner Cable’s purchase of Insight, both of which were in the $4,000-per-sub range.

WOW is not commenting on who will manage the merged company, according to WOW chief marketing officer Kathy Kuo.

The WOW-Knology combination creates a company with more than 800,000 subscribers, which would rank it as the 13th-largest of the country’s multichannel video programming distributors (MVPDs) and the 9th-largest cable operator.

“Our two companies have much in common. We share similar beliefs in how employees and customers should be treated, and we both know how to succeed in competitive environments. WOW and Knology are a natural fit; together, our people, network and operating infrastructure will combine to provide a strong platform for continued growth,” said WOW CEO and Chair Colleen Abdoulah.